The second album didn't do as well as the first. The first single reached 4 and the second 16. The label probably put a lot of money into the project and made very little back.
Iirc Steps made a comment about contracts around the time changing. Around that time alot of the groups were on quite lucrative contracts, as records were selling in high volumes at £3 or £4 and albums at £12. Then the internet came in, and record sales had collapsed (pre download), and people were buying albums at £8, instead of singles, and piracy had exploded.
If they were on one of the older more lucrative contracts that would have sealed their fate. Iirc wasnt their a bloodbath around that time for a year or two where a number of big acts were dropped.